Record spending props up farming

Government payments total $28 billion in last fiscal year Despite a farm bill that was designed to help remove the government from agriculture, the federal government paid a record $28 billion to farmers in the fiscal year that ended Sept. 30.

The figure, which was announced by Agriculture Secretary Dan Glickman, included two years' worth of supplemental Agricultural Market Transition Act or AMTA payments in one year. Congress appropriated the latter, which totaled $11 billion, to help farmers overcome droughts and two years of low commodity prices.

In making the announcement, Glickman once again criticized the 1996 Federal Agricultural Improvement and Reform Act or Freedom to Farm, saying the record payments "underscore the failure" of the legislation.

He also said the payments probably kept farmers from "storming the gates" in Washington because of dissatisfaction with the government's farm policy.

"I have no doubt that USDA assistance has meant the difference between small family farmers surviving or going out of business," said Glickman. In recent months, the administration has continually tried to delineate between small and large farmers in farm program benefits.

Glickman called a proposal raising the $75,000 limit on marketing loan gains to $150,000 per person "bad agricultural policy," although the measure was introduced by a member of his own party, Rep. Marion Berry, D-Ark. (Rep. Jo Ann Emerson, R-Mo., was the other primary co-sponsor of the legislation.

The Fiscal Year 2000 subsidies accounted for about half of farmers' incomes. Without them, U.S. farms would have seen incomes fall to their lowest levels since 1984 at the height of the last agricultural recession, the secretary said.

Glickman recently told a House Agriculture Committee that farmers would need $2.2 billion to $2.4 billion to overcome weather losses and continued low prices in the 2000 crop year.

Shortly after he testified, a House-Senate conference committee added about $1.6 billion in crop loss assistance funding to the Fiscal Year 2001 agricultural appropriations bill. The bill included another $490 million for livestock losses and $500 million for dairy farmers.

At press time, the bill was expected to pass both Houses and be sent to the president, who has indicated he would sign it.

Nearly $8 billion of the Fiscal Year 2000 payments came from marketing loan gains and loan deficiency payments. Marketing loan gains occur when farmers repay CCC loans at below the loan rate. Farmers may receive loan deficiency payments in lieu of putting their crops in the loan.

Loan deficiency payments, which totaled $6.28 billion in FY 2000, encourage farmers to market their crops rather than place them in the Commodity Credit Corp. loan where they might be forfeited to the government.

The market loss assistance or supplemental AMTA payments totaled $11.04 billion because they were based on the 1999 AMTA payment allocation of $5.5 billion rather than the lower 2000 figure of $4.8 billion.

The $28 billion figure also included $1.47 billion in payments for the conservation reserve program or CRP, $1.23 billion for crop disaster loss assistance, $459.96 million for oilseed assistance payments, $328 million for the tobacco disaster assistance program and $100 million for the cottonseed assistance program.

The total also included relatively small amounts for such items as the agricultural conservation program ($3.7 million), the emergency conservation program ($55.9 million), the peanut marketing assistance program ($55 million) and the noninsured assistance program ($24.2 million).